Dow slips slightly as US tech stocks fall

Lower-than-expected sales at Cisco Systems sent tech stocks tumbling today while the overall market was little changed after the Federal Reserve announced a widely expected interest rate hike.

Lower-than-expected sales at Cisco Systems sent tech stocks tumbling today while the overall market was little changed after the Federal Reserve announced a widely expected interest rate hike.

A jump in oil prices contributed to mild profit-taking.

The Dow Jones industrial average was down 0.89, or 0.01%, at 10,385.48.

The broader gauges were narrowly mixed. The Standard & Poor’s 500 index added 1.17, or 0.10%, to 1,162.91.

The Nasdaq composite index fell 8.77, or 0.43%, to 2,034.56, reflecting investors’ disappointment with Cisco Systems.

Cisco shed $1.31, or 6.6%, to close at $18.44, after issuing results that met profit expectations but missed sales forecasts.

Growth at the world’s leading maker of routers and switches that move data over computer networks remains strong despite cautious spending by its corporate competition, particularly from Asia-based rivals.

Despite relatively good economic news, overall trading was tepid, particularly in the face of volatile oil prices.

The Fed’s Open Market Committee nudged interest rates up a quarter point, bringing the federal funds rate – the interest banks charge each other on overnight loans – to 2%.

The market had little reaction to the rate hike, though investors closely read the Fed’s policy statement for hints about what lies ahead. Analysts took it as a good sign that the language in the statement was largely unchanged.

“This gives a very positive tone to their outlook on the US economy, despite higher energy prices,” said Joseph Battipaglia, chief investment officer at Ryan Beck & Co.

“There’s nothing to fear on the inflation front from where they sit, and they see flexibility in the labour market, which suggests they will allow faster job growth to show itself without having to move any quicker on rate changes.”

The government’s weekly report on petroleum inventories showed another decline in the nation’s supply of distillate fuels, which include heating oil.

Separately, the International Energy Agency, the energy adviser to 26 industrialised nations, indicated worries over a global heating oil supply crunch were easing.

Light, sweet crude for December delivery settled up 1.49 at 48.86, pressuring equities.

Still, traders noted that the stock market was holding up extremely well, particularly after several weeks of strong gains.

“The market is kind of meandering today,” said Todd Leone, managing director of equity trading at SG Cowen Securities.

“We’ve had a tremendous rally over the last three weeks, so now I think the market is feeling just a little overdone. Oil is up a buck-fifty, so people are taking some profits. To me, the best thing is that we’re still seeing money put to work. As long as we keep seeing inflows, we’ll be able to stay at these lofty levels.”

Meanwhile, the Commerce Department said the US trade deficit shrank to 51.6 billion (-39.8 billion) in September, a 3.7% drop from August as exports posted their best month on record.

The latest snapshot of trade activity showed exports of goods and services grew to a record 97.5 billion in September. Exports were helped by a weaker dollar, which makes US goods cheaper to foreign buyers, and improving foreign demand.

Imports registered a dip, but the reading was still the second-highest on record, a testimony to Americans’ solid appetite for foreign-made items.

Intel was down 22 cents at 22.86 after the chipmaker doubled its quarterly dividend to 8 cents per share and said it would buy back 500 million shares of common stock, expanding an ongoing share repurchase programme. Companies often buy back stock when they’re trying to boost share prices.

Advancing issues outnumbered decliners about 3 to 2 on the New York Stock Exchange.

The Russell 2000 index, which tracks smaller company stocks, was up 2.97, or 0.49%, at 609.61.

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